Company says it expects to pay suppliers in full under normal terms for goods and services provided on or after the Chapter 11 filing date
HOUSTON- Energy XXI Ltd announced Thursday that it and certain of its subsidiaries have entered into a restructuring support Agreement (the “RSA”) with holders of more than 63 per cent of the company’s secured second lien 11.0 per cent notes on the material terms of a balance sheet restructuring plan that will strengthen the company’s financial position by reducing long-term debt and enhancing financial flexibility.
In order to implement the terms of the RSA, the company commenced cases under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the Southern District of Texas, Houston Division.
According to Bloomberg, Energy XXI bought MitEnergy, picked up $1.01 billion of properties from Exxon Mobil Corp. and spent $2.3 billion on EPL Oil & Gas since it’s public offering 10 years ago.
Through the Chapter 11 restructuring, Energy XXI will eliminate more than $2.8 billion in debt from its balance sheet, substantially deleverage its capital structure and position the company for long-term success.
Energy XXI has filed various motions with the Bankruptcy Court in support of its financial restructuring. The company intends to continue to pay employee wages and provide benefits without interruption in the ordinary course of business.
The company also expects to pay suppliers and vendors in full under normal terms for goods and services provided on or after the Chapter 11 filing date, and anticipates making royalty payments and payments to working interest owners when due.
Energy XXI expects operations to continue as normal throughout the court-supervised financial restructuring process, including paying royalty and surety obligations in the ordinary course.
In addition, the company expects to maintain compliance with its existing long-term plan with the Bureau of Ocean Energy Management throughout the restructuring process.
“Today’s announcement reflects the next step in our efforts to respond proactively to the challenging market environment. Over the last several months, we have worked to actively manage our balance sheet, and after thoroughly evaluating our options with the help of our outside advisors, we determined that entering these agreements and implementing them through a court-supervised process is the best course of action for Energy XXI and all our stakeholders. We are confident that we are taking the right steps to provideEnergy XXI a solid foundation for a successful future,” said Energy XXI’s President and Chief Executive Officer John Schiller.